It's Not That Big a Deal

This Essay is Not FDA Approved

Last Thursday, Nicholas Kristof penned an article for the New York Times entitled “Drugs, Greed and a Dead Boy.” The piece provides a dismal account of an industry rife with predatory marketing schemes, ineffective treatments, and captained by covetous sociopaths who care more about making money than they do about public health and are prepared to circumvent FDA regulations in order to do so. Whatever your convictions, Kristof makes a compelling case for regulation based on historical evidence. It’s not until the last paragraph that he writes something that makes me pause:

So if you agree with today’s politicians thundering against regulation, or if you think that pharmaceutical companies should enjoy a free speech right to peddle drugs, then talk to a family fighting opiate addiction. Or a parent of a thalidomide child. Or consult the grieving family of Andrew Francesco.

I certainly have no problem admitting that the pharmaceutical industry, much like any industry, doesn’t always act in the best interest of the public. Nor do I have a problem accepting that parents are probably over-medicating their children (and likely themselves) in today’s hypersensitive world. What I take issue with is his thoughtless, implicit dismissal of regulation reform advocates who are seeking to improve a poorly designed system.

I make a point of not agreeing with any thundering politicians, however, as someone who finds fault with the regulatory structure of the FDA, I feel that the argument for reform warrants some defense. The following argument isn’t exactly original–I’ve heard it made by others before, probably better than I am going to make it now–but it is a concept worth defending.

The first thing to realize is that nobody is arguing against regulation (well, some might be, but I’m not) or a vetting process for new drugs. I would find it hard to believe that anyone seriously believes drugs should be less safe for consumers and would fight to craft policies that reflect such a notion. The real point of contention here is who should be doing the regulating, and how.

Kristof appears to be falling victim to a false syllogism: The FDA is a regulator; people want to get rid of the FDA; therefore, people want to get rid of regulation. Not so. What those who challenge the FDA process are protesting is a monopoly on regulation that invariably leads to an inefficient process by which drugs are taken to market, and thus eliminates less human suffering than would otherwise be possible.

To understand why this happens, you have to understand the unique predicament of an organization like the FDA and what kinds of incentives that predicament creates.

There are basically two ways in which the FDA can be said to be performing its function optimally (granted, this is probably an oversimplification). Scenario number one–it takes a good drug to market quickly and efficiently after ensuring that the product is safe for consumption. Scenario number two–it stops a bad drug from making it to market after determining that it is not fit for human consumption. When either of these scenarios are realized, that’s great, and we are all better off for it.

Similarly, there are two ways in which the FDA can be said to be underperforming. In the first, it takes a bad drug to market and risks the lives of consumers. In the second, it engages in an unduly lengthy regulatory process that delays the emergence of new drugs, also risking consumers’ lives. This is where things get tricky. While both outcomes result in human loss and are undesirable, one of these is far less appealing to the FDA.

Moving bad drugs to market is a sure way to shake faith in the regulatory body and create a panic. More importantly, the negative effects of such a screw-up are overt and blame is easily assigned to the organization responsible.

Delaying good drugs due to overly cautious behaviour, although potentially just as deadly, is not nearly as conspicuous. It’s much harder to measure the patients that hypothetically would not have died had the regulatory process been more efficient than the patients that did die due to bad drugs, but that doesn’t mean the effects are any less real. For example, if drug x saves 1,000 lives per year, and spends 4 years tied up in the regulatory process when it could have passed in 2, one could very easily make the argument that 2,000 lives were lost to this inefficiency.

Given the choice between the two, it’s not hard to understand why the FDA would opt to take the path that obfuscates the negative consequences of their decision making. At least in some cases, this must lead to an overly stringent approval process for good drugs. Because they have a monopoly on the regulatory process, there is no one to pressure the system to be more efficient.

A little competition might go a long way in solving these problems. Private regulatory companies might sound strange, but the idea is actually quite logical. This might work something like this:

Drug companies develop drugs and submit them to a regulatory company for quality assurance: a service for which they pay.

The regulatory company tests the drug to its standards by its processes. If it doesn’t pass, the story ends here.

If it does pass, however, the regulatory company approves it and affixes their logo to the medication, much like the FDA does now.

The drug goes to market where consumers use the logos as signals of quality. The more they trust the logo, the more they trust the drug. Logos gain trust by screening accurately and lose clout by rushing drugs to market with bad consequences.

The most trusted logos are in higher demand by people making (and consuming) good drugs, because they want consumers to trust that they’re safe. This in turn re-enforces the incentive to provide strict testing.

Furthermore, drug companies would be willing to pay a premium to have their testing done quickly as well as accurately. This remedies the inherent flaw in the FDA’s design: the zero-sum game between accuracy and timeliness. From the consumer side of things, that means more lives saved/improved.

This solution would do a lot to align incentives within the process of getting safe drugs on shelves, so to speak. If the point of the FDA is ultimately to save lives and improve the quality of medicine–and we should presume it to be such–then why not create a system which could save and improve more lives? If it can be done by private companies, so much the better. All this is not to say that the FDA should be dismantled, but if we are able to admit that allowing for a competitive space can improve services to consumers, then what might be the benefit of having the FDA remain in such a position?

Perhaps it could serve in some overseer capacity–ensuring that no fraud or collusion occurs. Again, the point is not to eliminate the FDA or regulation; the point is to improve the regulatory process and save lives.

There is a semantic problem with Kristof’s (and many others’) understanding of regulation in that he understands it to be inherently and exclusively a purview of the government. Evidently, he has never paused while using Yelp, Uber, or Rotten Tomatoes to consider that these too are forms of regulation that let us know when something is fit for consumption.

Kristof and other “pro-regulators” usually understand the negative impacts of monopolies–inefficiency, unresponsiveness to consumers–and call for regulations to break them up. Competition is the way things get better–no industry is immune to this reality. Ironically, people who want to reform drug regulation for the same reason are met with staunch criticism by regulatory enthusiasts.

Once again, semantics plays a part in obscuring the fact that having a singular body in an industry is a monopoly, even if that body is a government entity. Monopolies are for private corporations; regulations are for governments. Again, not so.